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Ms Beattie said she and her sons had a lucky escape but they would continue to live in the area and rebuilt their home.

'It was last moment but life is all the matters and I'm sure we'll find a new way of restocking and learn from this and really heightening the value of being alive.

'It's beautiful here. It's worth living here and taking that risk [of staying in the area].'

Chris Beattie and his mother, Helene, were at home when the blaze spread to their street

Ms Beattie have told of the moment she and her son narrowly escaped the fire which claimed their home within minutes

Carl said the house and its contents could be rebuilt or re-bought, but the most important thing was everyone was safe and happy

Chris' brother, Carl, was not home at the time of the blaze.

He said the house and its contents could be rebuilt or re-bought, but the most important thing was everyone was safe and happy.

The Beatties surveyed their burnt-out home on Sunday and thanked firefighters as well as the community for their help, saying they had been 'blown away' by the support.

As tourists packed into Katoomba's cafes on Sunday, just a charred shell remained of a family home on Cliff Drive on the township's outskirts, its corrugated metal roofing buckled and blackened.

Surrounding properties around the Beatties' home - which was now just charred shell of blackened corrugated metal roofing - were still taped off as Rural Fire Service members extinguished spot fires.

The house was gutted when erratic winds caused the bushfire to break containment lines on Saturday.

A Rural Fire Service (RFS) member told AAP conditions had calmed down a lot.

'We're just looking after this one now unless something happens in the afternoon, like the wind changes,' he said.

The fire, which the RFS suspects was deliberately lit, was still burning out of control in the valley below the gutted home but was no longer posing a threat to properties on Sunday.

The Beattie family - the residents of the house - say they will now rebuild and described the fire as 'terrifying'

Firefighters say conditions on Sunday have calmed down compared to Saturday's wild weather

A firefighter walks away from a burnt-out property in the Cliff Drive area in Katoomba

The Beatties assessed the damage to their Cliff Drive home on Sunday - the day after the devastating blaze

Firefighters are monitoring the fire and are putting spot fires out in the surrounding areas of the home

Fire crews were assessing the area as helicopters dumped water on the thick, smouldering bush.

They will be backed up by Remote Area Firefighting Teams as weather conditions allow.

Their biggest concern was a return of strong gusts, which could push the fire back up the cliff and towards homes.

Saturday's first big test of the bushfire season came as the Blue Mountains community continued its recovery from blazes that destroyed more than 200 homes in Winmalee and Springwood in October last year.

One home has been been lost to a relentless bush-fire which is still raging through Katoomba in the Blue Mountains

It was previously reported that two homes had been burned by the bush-fires, however this was revised after firefighters found that one home which was destroyed had two entrances

The fire services also confirmed that the immediate threat to properties has eased and it been revised back to a watch and act, but firefighters are continuing to work on the fire to contain it

'I certainly hope that this is it for the fire season, but I can't say that it is,' he told AAP.

'I've spent too much time speaking to families who've lost their homes, spent too much time seeing grief.'

A fund established after last year's tragedy could help the Katoomba family that lost their home on Saturday, he said.

About 100 people sought shelter in the local RSL as the fire encroached on Saturday, but they were allowed to return home later in the evening.

More than 1,000 firefighters were deployed across NSW on Saturday to battle 70 bushfires and more than 200 firefighters remained on scene throughout the night.

It was previously reported two homes had been burned by the bush-fires, but this was revised after firefighters found one home which was destroyed had two entrances.

NSW Rural Fire Service has confirmed that the cause of the fire is being investigated and is being treated as suspicious

Speaking at a press conference on Saturday, Mr Greenhill said his heart went out to the family who had lost their home in the fire.

'The loss of a home is not just the loss of bricks and mortar or roofs and walls, it's a loss of a sense of place, a loss of neighbours and a loss of memories.' he said.

The fire started on Saturday morning near Cliff Drive in Katoomba, close to the Three Sisters at Echo Point.

The blaze comes 12 months after more than 200 homes in the region were destroyed in a devastating bushfire season.

BUSH FIRE ADVICE

If your life is at risk, call Triple Zero (000) immediately.

Continue to stay up to date with the bush fire situation by checking http://www.rfs.nsw.gov.au, listening to your local radio station or by calling the NSW RFS Bush Fire Information Line on 1800 679 737.

If you live in the area but are away from home, it may not be safe to return to your property.